Bonuses paid to fund managers must be capped and salaries should be linked to their funds' performances, say the members of the European Parliament's Economic and Monetary Affairs Committee in a draft law.
The text says the variable component of a fund manager’s total salary should be no more than the fixed component. In addition, half of the variable remuneration should be paid in units of the Ucits fund concerned.
Massimo Tosato, chief executive officer at Schroders Investment Management and vice president of the board at the European Fund and Asset Management Association (Efama), challenges the draft law.
Tosato says regulation on remuneration needs to reflect the global place in which asset managers compete.
“We do support the request for greater transparency, but we need to retain the flexibility to pay for performance,” he says. “Without this flexibility we would be much less able to compete with international firms that are not based in the EU.”
Sven Giegold, a member of the European parliament, says the Ucits bonus cap will help strengthen investor protection and reduce risky speculation.
“It will also complement the recently adopted EU rules capping bankers' bonuses, ensuring these rules cannot be circumvented and providing for a level playing field,” he says.
Tosato says international asset managers, including Schroders, need to compete with their local peers in regions such as Asia and the Middle East, and a cap on fund manager pay would be a constraint.
Another area where Efama says Europe’s asset management industry would have a competitive disadvantage is the proposed financial transaction tax.
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